Dick Arseneault, owner of Atlantic Bioheat, says furnaces like the one his company already has set up at Westisle Composite High School in Elmdale greatly reduces reliance on oil, with the backup oil heater only needed on the coldest days.

"We're looking at, the buildings I have, almost half a million litres of oil after this should be replaced by biomass instead of bringing fossil fuel in," Arseneault said.

The $300,000 furnance burns wood chips that are scrap from the milling process. The company, which owns the furnace, sells the heat back to the province at slightly less than the cost of oil.

This pilot project is part of the province's plan to reduce its reliance on fossil fuels and keep some of that money on the island.

Atlantic Bioheat will supply biomass-based heat to M.E. Callaghan Intermediate School in Elmdale and Hernewood Intermediate School in O'Leary.

Three Oaks Senior High School in Summerside, Bluefield High School in Hampshire and the O’Leary Community Hospital will be supplied with biomass-derived heat from Wood4heating.

Not enough wood harvesting rules: critic

The plan has its critics.

Gary Schneider, supervisor of the Macphail Woods Ecological Forestry Project, says there aren't enough stipulations on how wood can be harvested and points out that provincial rules allow limited clear-cutting to produce heat.

"Keeping the forest healthy and making a forest healthy is what's important," he said. "So if you can get heat off it, that's fantastic. But you can't say I want cheap electricity or I want cheap oil, and we'll do it on the backs of our forests."

Arsenault says there's more than enough biomass to heat every school and hospital on the island because there is no longer a market for wood going to pulp and paper mills.

In May, when the government put out a request for proposals for biomass in six buildings, it argued that biomass would be good news for the forestry business and that only sustainable and environmentally friendly companies would win contracts.

Biomass heating is a recommendation contained in both the Prince Edward Island Energy Strategy and the Climate Change Strategy.

The government is looking at the possibility of expanding the program further.